US appetite for English football – no sign of abating

A YEAR ago, Arsenal fans were calling for owner Stan Kroenke to ship-out of North London, Manchester United’s legions were pouring hatred on the Glazer family and Todd Boehly was a relatively unknown figure in English sport. Move the dial forward and Boehly and his consortium now owns Chelsea, the Glazers are supposedly looking for the best exit route from Old Trafford and Arsenal are standing astride the Premier League and all in the garden seems rosy. Nobody appears to be calling for Kroenke to leave the Emirates Stadium, proving that nothing lasts forever in football, not even the ire of dissatisfied customers.

US football club ownership is a growth industry: In 2022, Chelsea and Bournemouth were acquired by American investors, bringing the number of 100%-owned Premier clubs to six and another four that have minority US investment. Almost half of all Premier League revenues in 2021 were earned by US entities.

With Russia and China seemingly out of the picture, the most likely type of investors in English football are from the US or the Middle East. While the US sports team owner seeks some form of return, the likes of Saudi Arabia, Abu Dhabi and Qatar are looking for credibility and a way to improve their image. American owners are very different from the former Chelsea benefactor, Roman Abramovich, who poured money into the club and only asked that he could exercise his power by hiring and firing his managers.

The appeal of clubs from England and the other top football markets is driven by the revenue potential of the leagues, notably from commercial and broadcasting income streams that have grown enormously in the past decade. “There’s a feeling that these markets are not yet saturated, so there’s still scope for growth,” says former investment banker Craig Coben. “And the clubs have enormous fanbases that go back decades, with a degree of fan loyalty stickiness which can be leveraged.” US investors believe the longevity of the clubs, a crucial part of the heritage of English football, creates a certain type of immunity from business obsolescence.

There is a downside for US sports investors in that European leagues are open and clubs can suffer relegation from elite divisions, thereby decimating their income. This is in stark contrast to US structures. “Relegation can be an enormous blow, not just for the clubs, but also the owners,” adds Coben. “In the US, salary caps, the lack of relegation and the so-called college draft that enables less successful teams to have first choice on emerging young talent, all act as a stabilising mechanism.” It also means US team owners, because of greater certainty, can implement greater levels of cost control and future planning.

Coben describes Premier League football as a “hook and claw, somewhat carnivorous league,”, a form of “survival of the fittest”. Nevertheless, the cut and thrust of English football, indeed the European game, does not seem to have deterred partners. “Some have lost their shirts on football, but more recently, data has been informing decision-making. The US is at the forefront in the use of data and this has given investors greater confidence to enter the market,” says Coben.

There’s little doubt the value of elite football clubs has risen substantially over the past 10 years. When Boehly’s consortium purchased Chelsea, £ 4.25 billion changed hands. Abramovich, in 2003, paid Ken Bates, the Chelsea chairman, just £ 140 million for the club. When both Liverpool and Manchester United’s owners suggested they were open to offers for fresh investment, the anticipated valuation of the clubs fluctuated wildly, with United hitting the US$ 5 billion mark. “The top names haven’t just spent a lot of money on players and wages; at the same time, the strategic approach of some clubs has also dramatically increased the value of their franchises,” says Coben.

The value of club brands, a reflection of global franchise building, has also climbed substantially – in 2012, Manchester United’s brand was valued at US$ 853 million but by 2022, it had grown to US$ 1.45 billion. Manchester City, meanwhile saw their brand value rise from US$ 302 million to US$ 1.5 billion (source: Brand Finance). Contributing to this impressive growth rate has been broadcasting fees, increased sponsorship and the increasing polarisation of European football.

Will it continue or is the US penchant for European football assets a passing phase? With the global economy on the brink of a downturn and the ongoing war in Ukraine threatening to turn the lights off across parts of Europe, there will be challenges. “A lot of potential owners are very well capitalised and there is a high level of innovation that can access green-field opportunities in football, but after all is said and done, spending money on football is discretionary, so if the macroeconomic situation deteriorates, that could change investor sentiment. At the moment, however, it is difficult to see the current appetite subsiding,” says Coben.

Serie A: The creature from the Venetian lagoon rises

VENICE is one of the most iconic cities in the world and attracts 30 million tourists in a normal year. But very few people have ever associated the famous sinking city with football, even though the history of the game in Venice goes back 114 years.

Mention football in the same breath as Venice and it conjures up an image of a ball floating in the lagoon. You wonder if, like Shrewsbury Town’s old riverside ground, a flat-capped man in a boat was ever employed to fish-out stray clearances from the water. 

More recently, Venezia FC have attracted the attention of football hipsters, notably in the US, many of whom fell in love with the club’s very notable orange, green and black shirt. This season’s strip, designed by Kappa, is predominantly black.

Venezia’s link with the US has also included club ownership. In 2015, a group of investors, fronted by celebrity lawyer Joe Tacopino, restarted the club after bankruptcy. Tacopino, with his square jaw and Wall Street slicked-back hair, was something of a larger-than-life figure who loved a soundbite. “Venezia will be a great name in Italian football and then Europe,” he declared. His previous club, Bologna, was also an instant love affair. “The only way I will leave is in a coffin,” he said. But it turned sour at the gastrononomic capital of Italy and he moved to Venice. He had also been with Roma before Bologna. Tacopino is now at Catania, where he has vowed to make them one of the greatest teams in Italy.

In early 2020, Tacopino was removed as Venezia president and Duncan Niederauer was appointed in his place. Niederauer is a former Goldman Sachs banker and was CEO of the New York Stock Exchange. He admits to being on a learning curve and is making no bold predictions about the future. Venezia won promotion to Serie A in 2020-21, returning to the top flight for the first time since 2002, but he appears to be taking a long-term view. “If we don’t succeed in Serie A, that doesn’t mean we’ve failed,” he said, pointing to all the improvements made by the club to their business model, their stadium and training ground.

Even though the unpredictability of European football can be a deterrent for US investors who hanker for closed leagues and a more stable return, Venezia will be one of five Serie A clubs with American backing in 2021-22 – Roma, AC Milan, Spezia and Fiorentina are the others. Niederauer wants to make Venezia into sustainable commercial enterprise with proper budgets and objectives, balancing success on the field with a responsible fiscal approach. Importantly, he has made it clear personal egos cannot get in the way of the club’s progress. 

Everyone at Venezia knows that Serie A will be tough for a club that has come a long way since 2015 when they won Girone C of Serie D, the fourth tier of the Italian game. The following season, they won the North & Central East division of Lega Pro to return to Serie B. They were promoted in 2021 via the play-offs to Serie A, a division they last graced in 2002. Rather uniquely, as befits a team from such a place as Venice, the victors paraded through the canals of the city in a boat to celebrate their success. 

History tells us that it may be a struggle for Venezia. In their history, they have spent 13 seasons in Serie A and since the second world war, whenever they have won promotion, it has been followed by relegation within two years. Aside from their own record, promoted teams in Serie A generally struggle to adapt. In the past decade, 15 of the 30 promoted teams have gone back to Serie B at the first time of asking and another seven have suffered the drop by their third campaign.

They are sure to attract curious visitors to their Stadio Penzo, named after Pierluigi Penzo, a pilot who was involved in a rescue operation in the north pole in 1928 but never returned home as his plane struck some power lines in France and crashed into the Rhone river. Penzo drowned and was rightly pronounced a hero across Italy. Venezia will play away while some changes are being made to the ground.

The club has shown it is very much of its time – they hired an analytics expert to enhance their scouting efforts (echoes of moneyball) and also an “artist in residence”, a rather unusual role, but one very much aligned to Venezia’s taste for the aesthetic.

The club has been adding to coach Paolo Zanetti’s squad in the build-up to the 2021-22 season. They attempted to sign a trio of young players from Inter Milan and most of their new arrivals have been based on potential. Tanner Tessmann (19) cost Venezia € 3.6 million from Major League Soccer side Dallas, while Arnór Sigurdsson (CSKA Moscow), Daan Heymans (Waasland-Beveren) and David Schnegg (LASK) are all 22. Venezia have managed to keep leading scorer Francesco Forte, a 28 year-old Roman who scored 15 goals in 2020-21. He’s currently on a three-year contract. The club was hoping to persuade Inter striker Sebastiano Esposito to join them again on loan after playing for Venezia in the second half of 2020-1, but he has joined Basel.

Can Venezia compete in Serie A alongside the powerful northern clubs, Juve and the Milan duo? They start their league programme on August 22 in Naples and don’t play at home until late September when they host Spezia. Moreover, can they attract the crowds to their limited stadium? When they were last in Serie A, Venezia drew attendances of less than 8,500 but in recent years, gates of 3,500 have been commonplace. But if I Lagunari (the lagoonal ones) get it right, they could tap into the many visitors to their historic home, and the narrative around Venice may be less about sinking, but more of a football city on the rise.

Photo: TeaMeister CC-BY-2.0